10 Tips for Learning Basic Stocks and Earning Stable Profits

Getting into the world of stock investing is not always an easy journey, especially when you’re just starting to learn basic stocks. However, with experience from successful investors, you can completely avoid many common mistakes. This article will share 10 important tips to help you build a solid foundation in stock trading.

1. Choose an investment method that suits your goals

When beginning to learn basic stocks, the first step is to clearly define your investment objectives. There are two main approaches you should consider:

Short-term investing based on technical analysis, day trading, or trading over a few weeks. This method requires continuous monitoring of price charts, catching technical signals, and frequently executing trades. Returns can be high, but so are the risks.

Long-term investing focuses on selecting quality stocks and holding them for many years. You need solid knowledge of fundamental analysis, understanding financial reports, and knowing the industry in which the company operates. Profits may be lower in the short term but more stable.

Each method demands different knowledge, skills, and psychology. Clearly defining your approach from the start will help prevent wavering between strategies, thereby reducing emotional decision-making errors.

2. Diversify your portfolio - Smart defensive strategy

Diversification is a golden rule that Warren Buffett and most experienced investors follow. Instead of putting all your money into a single stock, you should spread your capital across multiple stocks, different sectors, or even different asset classes such as cryptocurrencies, forex, or commodities.

For example, stock indices like S&P 500 or VN30 are already diversified portfolios with dozens of stocks. When the bull market declines, these portfolios tend to fall less than holding a single stock. During strong upward trends, a diversified portfolio may not increase as much as a single stock, but the average annual return often outperforms savings accounts or bonds.

3. Skills in selecting quality stocks

For those choosing long-term investment, selecting good stocks is crucial. To learn effective basic stock investing, you need to recognize signs of a worthy stock to hold:

• Low debt levels with liquidity ratios above 1.5 (current assets/current liabilities), indicating the company’s good debt repayment ability
• Stable revenue and profit growth over the past 5 years
• Improving profitability ratios such as profit margin, ROE, ROA
• Consistent dividend payments, reflecting financial health
• Reputable, transparent management

Large companies like Vicostone, Vingroup, Vinamilk, Hòa Phát have proven their strength through decades of growth. Although returns during bull phases may not be as impressive as small-cap stocks, they are ideal defensive assets when the market turns downward.

4. Timely adjustment when market trends change

Even long-term investors need to periodically monitor their portfolios. The economic world is constantly changing—policies shift, consumer demand moves—all affecting stock values.

Take the COVID period as an example: governments loosened monetary policy, lowered interest rates to stimulate demand. This led to a sharp increase in real estate prices due to easier borrowing. However, from early 2022, policies tightened, credit limits for real estate were imposed, causing demand to decline and real estate stocks to reverse downward.

A smart investor will flexibly adjust portfolio weights to adapt to these changes, rather than holding rigidly.

5. Risk control - Essential toolkit

To survive long-term in trading, protecting capital is the most important. Basic risk control tools include:

Stop Loss orders (Stop Loss): When a stock drops to a certain price, this order automatically sells to cut losses. For example, if you buy at 100 and set a stop loss at 90, your maximum loss is 10%.

Conditional buy orders (Buy Stop): Help you buy when the price breaks above a certain resistance level.

A common strategy is to set stop-loss points at 10-15% from your entry price. This ensures that even if the trade doesn’t go as planned, your losses remain manageable.

6. Determine entry and exit points using technical analysis

To improve win rates and reduce losses, you need to know the optimal times to trade. The two most popular indicators are:

RSI (Relative Strength Index): Measures overbought/oversold levels

• RSI below 30: stock is oversold, likely to recover
• RSI above 70: stock is overbought, likely to correct

Stochastic Oscillator: Identifies reversal points

• Above 80: overbought, approaching peak
• Below 20: oversold, ready to rebound

These indicators are not absolute, but when combined with other signals, they provide a mathematical basis for decision-making rather than relying on emotions.

7. Tips for catching the bottom of stocks

Successfully catching the bottom can generate huge profits but is very risky if not well-prepared. Signs that a bottom is near:

• Prices form new lows but momentum indicators (RSI, Stochastic) start rising. This indicates selling pressure is weakening
• Subsequent lows are higher than previous lows, signaling selling exhaustion
• Trading volume spikes during declines, showing investors are starting to buy the dip

However, only allocate a small portion of your capital to this strategy. Avoid risking all assets on this gamble. Stay away from speculative stocks or those priced below par, as they can fall too deep.

8. Do not borrow to invest - Costly lesson

A common mistake many make is borrowing money to invest with high return expectations. In Vietnam, many “black companies” use fake apps with unrealistic interest rates (1000%/month) to lure users.

Golden rule: only invest with idle cash or savings that you can afford to lose without affecting your life. If you want to amplify returns, use margin cautiously and understand the risks. With a margin of 1:20, you can control maximum losses at your initial capital without incurring debt afterward.

9. Continuous learning - Key to success

To truly learn basic stocks effectively, you need continuous practice. Theory alone is not enough—you must experience real situations to develop analysis skills and emotional management.

A good way to start is by using a demo account, where you can trade with virtual money without real risk. This allows you to test strategies, learn from mistakes, and accumulate experience safely before using real capital.

10. Psychology - The final decisive factor

The stock market is highly volatile. A position with big gains can turn into losses within days. Maintaining a stable mindset is essential.

Avoid rushing to cut losses out of fear, or selling profitable positions just to realize small gains. Analyze the reasons behind market fluctuations and see if your strategy still makes sense. Often, impulsive decisions lead to regret later.

Learning basic stocks is a journey that requires patience, discipline, and long-term thinking. With these 10 tips, you have a solid foundation to build a sustainable and steadily growing portfolio. Remember, success doesn’t come from a few big trades, but from many correct decisions over time.